Myth Busting: You Need 20% Down to Own a Home in Northern Virginia

Especially in Washington DC and Northern Virginia real estate, many home buyers wait to have a 20 percent down payment saved while the home prices continue to increase. Did you know that you don't need to have a 20 percent down payment to buy a home? 

When the housing market crashed in 2008, many people were left with the impression that it was more difficult to get a mortgage loan. This is true, the lending process is more rigorous today than it was before 2008. However, you can still buy a home with less than 20 percent down, and it can be financially worth it for you. There are several home mortgage programs that don't require a 20 percent down payment. For example, a VA loan or FHA mortgage, both don't require 20 percent down. Depending on how you structure the loan, it also might not make the monthly cost that much lower for each percentage down. 

Scott Silverstein from Caliber Home Loans says that, "Having 20% down is no longer a necessity in today’s mortgage market. Depending on the price point, typically, borrowers can get away with 3-5% down payment and some could even take advantage of zero down. We even have loan products to go up as high as $2M with 5% down and $3M with 10% (no PMI!) Yes, there is typically mortgage insurance when you put down less than 20%...however, there are multiple ways to structure a loan to lessen the burden of PMI. Even though PMI is a necessary evil, it certainly shouldn’t be the reason someone should hold off and save up 20%."

Conventional Loans for 3 Percent Down

Most people are not aware that there are conventional loans that allow you to put as little as three percent down for buying. Fannie Mae and Freddie Mac are two such lenders that offer low down payments on conventional home loans.

What to Do With a Low FICO Score? 

There are still options for people with low credit scores. Generally, these loans require 10 percent down. These loans do give breaks on the insurance for the loan as your FICO score gets closer to 700.

Down Payment Assistance Programs

If you aren't able to come up with the down payment that you need, there are still options. Many government-run programs offer grants and no interest loans to support home ownership if you qualify based on income. 

Affordable Home Ownership Programs

In the Washington DC area, there are many affordable units that must be sold with other units and development projects. These units are offered to people within a certain income bracket. Many of these units are available because it can be difficult to both meet the income requirements and get approval for a loan. So if you qualify, you could be in luck!


At Allied Title & Escrow, our team of industry experts and attorneys have over 25 years of experience in title, settlements and real estate transactions. Headquartered in Arlington, VA, we provide residential and commercial services throughout all counties of Northern Virginia, Washington DC and Maryland. We strive to provide the highest level of service and will handle all aspects of the title and settlement process.